What Buyers and Sellers should know about the current housing market

Buyers: Home Prices Won’t Come Crashing Down

Good things may come to those who wait, but patience doesn’t always pay off in the housing market. Two-thirds of homebuyers are waiting for mortgage rates to fall this year before buying a home.

In the time that homebuyers have been holding out for lower rates, home prices have continued to rise.

Real estate markets are expected to stabilize next year – but buyers shouldn’t expect housing prices to come crashing down, at least not on a national level.

Although real estate values aren’t likely to drop significantly, it’s still positive that they’re not likely to keep rising at the double-digit pace seen in 2021 and 2022. Without over-the-top bidding wars to drive home prices through the roof, buyers can expect more properties to choose from.

That’s not to say it will be a buyer’s market, but there should at least be some more balance between buyers and sellers.

Sellers: You’re a Buyer, Too

Perhaps the biggest hurdle facing sellers is that they still need a place to live once they’ve sold their current home. For many, that means overcoming the lock-in gap to buy a new home at today’s rates and home prices.

The mortgage lock-in effect depends on two factors: the average rate that homeowners are currently paying and the average rate that’s available to them if they finance another home now.

The jump in mortgage rates over the last two years has frozen housing markets nationwide. Many homeowners are unwilling to give up their current mortgage rates, and others simply can’t afford to sell their homes and buy new ones at today’s rates and housing prices.

This will change as the rates fall into the 5% range or better yet stay in the 5% range in the coming months as well as in 2025 as expected.